In addition to product availability, convenience and price comparison, retail differentiations are also coming into play as part of the decision-making process when it comes to where the consumer loyalty is shifted—whether it’s to the retail outlet or to the CPG brand.
Retail store Target is one outlet that upped its game in adding a produce section to its brick-and-mortar chains across the country. “Target is trying to add enough food products so that the consumers do all of their shopping there and stock up on items based on convenience,” explained Jonathan Golovin, Ph.D., Chairman, Chief Executive Officer and Co-founder of Retail Solutions Inc.
“All the retailers are starting to look alike as they compete on the same basis,” Golovin continued. “So if you think about grocery or pharmaceutical, the drugstore chains are starting to add more and more food products. If you go to Duane Reade in New York, you can actually get a sandwich or sushi—so they are starting to look like a convenience store, which is their strategy. If you go to a grocery chain, they have a pharmaceutical department in the back, they have bakeries—so they are trying to look like they can be a one-stop shop. So on top of the competition from Amazon and these price comparisons, everybody is saying ‘I’d like to get as many of the consumer’s shopping trips as possible,’ so even the competition across traditional lines is getting stronger. And the consumer really has a lot more choices these days.”
The power of promotion
Especially crucial now during the last weeks of the holiday season, the power of promotion is one factor that will change where the power is today in terms of “both the CPG and retail companies making their numbers, getting the return on investment that they are working to get in order for their business to survive,” said Courtin.
“What is happening is that the loyalty programs are really the key—they are going to be the make or break for these retailers because it is the only shot they have to have a one-to-one communication with their shoppers and actually keep some of them by analyzing what they are buying, what is not in the basket and what they think their consumers might want,” added Golovin.
Safeway Inc.’s “Just for U” program is one such loyalty program which provides personalized deals according to a consumer’s needs (i.e., past purchases) to help them plan their shopping trip better.
“If I think about Safeway and their ‘Just for U’ program, one of the things that they do is they always have these Friday specials,” explained Marie Jackson, Chief Marketing Officer, Retail Solutions Inc. “But if you are a ‘Just for U’ member, they extend that for the entire weekend. So if you can’t get to the store on Friday, you now have the opportunity to get to the store on Saturday or Sunday to get the same thing. So it’s the loyalty by giving you tips and making you feel special about the way they are treating you or communicating with you.”
While price and delivery are the main factors that come to mind when it comes to consumer demand, part of the continuing battle in the CPG and retail space will also encompass the entire shopping experience overall. While an online retailer may understand some of your needs based on items in your “virtual” basket, they don’t capture all of the consumer visibility because a consumer may only be buying a portion of products online, while still going to their local store for items they would prefer to have direct contact with, for ex., furniture. Enter Costco, which provides shoppers with standard items such as food and beauty items, but has a power of keeping season items in stock based on location and surrounding communities.
“Some of the reasons that people go to Costco is because while there prices are fantastic, you’re always curious about what they are going to have there,” said Golovin.
Add to that the free samples of food to munch on while shopping and you’ve got a case “shopper experience” scenario already.
“It’s just more value-add—it’s building a deeper relationship where the retail store becomes more of a place a consumer wants to go and a trusted advisor than just a commodity making a transaction,” said Golovin. “So there is going to be a trade off in, in-person experience versus convenience and price—and they are going to battle back and forth.”